INTERNATIONAL ADR MOOTING COMPETITION, 2016

5th July- 9th July 2016

HONG KONG

ON BEHALF OF AGAINST

CLAIMANT RESPONDENT

Albas Watchstraps Mfg. Co. Ltd., Gamma Celltech Co. Ltd.,

241 Nathan Drive, 17 Rodeo Lane,

Yanyu City, Yanyu, Mulaba, Wulaba

MEMORANDUM FOR CLAIMANT

TEAM NUMBER 872 C

LIST OF ABBREVIATIONS

ABBREVIATION

CONTENT

& And

AAA Rules International Arbitration Rules of the

American Arbitration Association

Art. Article

CIETAC China International Economic and Trade

Arbitration Commission

CIETAC Rules China International Economic and Trade

Arbitration Commission CIETAC Arbitration

Rules

CISG United Nations Convention on Contracts for

the International Sale of Goods

Clarification ADR International Mooting Competition,

Request for Clarifications

Claimant Albas Watchstraps Mfg. Co. Ltd.

Co. Company

DDP Delivery Duty Paid

Ex. Exhibit

FTCA Serbia The Foreign Trade Court of Arbitration with

the Chamber of Commerce and Industry of

Serbia

ICC Rules International Chamber of Commerce Rules

of Arbitration

ICSID Convention Convention on the Settlement of Investment

Disputes between States and Nationals of

Other States

Incoterms 2010 International Commercial Terms 2010

Japan CAA Rules Commercial Arbitration Rules of the Japan

Commercial Arbitration Association

No. Number

p. Page

Parties Albas Watchstraps Mfg. Co. Ltd. and

Gamma Celltech Co. Ltd.

PCA Croatia The Permanent Court of Arbitration with the

Croatian Chamber of Commerce

Respondent Gamma Celltech Co. Ltd.

S. Section

SoD Statement of Defense

SPA Sale and Purchase Agreement

The Agreement The Sale and Purchase Agreement between

Albas Watchstraps Mfg. Co. Ltd. and

Gamma Celltech Co. Ltd.

The Tribunal Ms. Felicity Chan, Dr. Anne Descartes and

Mr. Martin Mayfair (presiding arbitrator)

UNCITRAL Rules United Nations Commission on International

Trade Law Arbitration Rules

VAC Rules Rules of Arbitration and Conciliation of the

Vienna Arbitration Centre

TABLE OF AUTHORITIES

BOOKS

Cited As Content Citing

Footnotes

Chap. 5.4(c) Redfern &

Hunter

REDFERN A. & HUNTER M., LAW AND PRACTICE OF

INTERNATIONAL COMMERCIAL ARBITRATION, 1999,

Chap. 5.4(c)

1

Redfern &

Hunter(2004), p. 295

REDFERN A. & HUNTER M., LAW AND PRACTICE OF

INTERNATIONAL COMMERCIAL ARBITRATION, (4th

ed., London 2004), p. 295

12

BORN(2001), p. 298 BORN G., INTERNATIONAL COMMERCIAL

ARBITRATION, (2nd ed.. Hague 2001), p. 298

12

FOUCHARD(1999), p.

1222

FOUCHARD GAILLARD GOLDMAN, INTERNATIONAL

COMMERCIAL ARBITRATION (ed. Gaillard E., Savage

J., The Hague 1999) p. 1222.

12

Honnold(2009) UNIFORM LAW FOR INTERNATIONAL SALES UNDER

THE 1980 UNITED NATIONS CONVENTION, Harry M.

Flechtmer ed., (Wolters Kluwer, 4th ed., 2009)

44,47

Schwenzer(2010) INGEBORG & SCHWENZER, COMMENTARY ON THE UN

CONVENTION ON THE INTERNATIONAL SALE OF

GOODS (3rd ed., 2010)

36, 41, 46,

51, 52

CASES

Cited As Content Citing

Footnotes

ARAMCO Case Saudi Arabia v. Arabian American Oil Co. Ltd

(ARAMCO)ILR 1963, at 117

4

Joc Oil Case Sojuznefteexport (SNE) v. Joc Oil Ltd.

translated in (1990) 6 Arbitration International 79

4

Texaco Case Texaco Overseas Petroleum Co./California Asiatic

Oil Co. v. Government of Libya YCA 1979

4

JA Apparel Case

(2010)

JA Apparel Corp. v. Aboud 682 F.Supp 2d 294 2010

U.S. Dist. LEXIS 2151 (S.D.N.Y. 2010)

5

Reyes Case (2012) Reyes v. Metromedia Software Inc. 840 F.Supp.2d

752, 2012 WL 13935 S.D.N.Y., January 04, 2012

5,9

MBIA Case (2012) MBIA Ins. Corp. v. Patriarch Partners VIII, LLC

2012 WL 382921 S.D.N.Y., February 06, 2012

5, 10

Dan Dong Dong Jin

case (2012)

Dan Dong Dong Jin Garment Co. Ltd. v. KIK

Fashions Inc.

2012 WL 2433530 S.D.N.Y.,2012, June 27, 2012

5

Hirshenson

case(2001)

Hirshenson v. Spaccio 800 So. 2d 670, 674 (Fla. 5th

DCA 2001)

6

Mercury Construction Moses H. Cone v. Mercury Constr. Corp. 460 U.S. 1, 6

case (1983) 24-25 (1983)

Maguire v. King

(2005)

Maguire v. King

917 So.2d 263, 266 (Fla.App. 2005)

6

Owens-Brockway

case (1996)

Austin v. Owens-Brockway Glass Container, Inc.

78 F.3d 875, 879 (4th Cir. 1996)

6

Ziegler case (1982) Ziegler v. Knuck 419 So. 2d 818 (Fla. 3rd DCA 1982 6

Conax Florida

case(2007)

Conax Florida Corp. v. Astrium Ltd.

499 F. Supp. 2d 1287 (M.D. Fla. 2007)

6

Bharat Engineering

Corp case (1977)

Union of India v. Bharat Engineering Corp.

(1977) 11 ILR Delhi 57

7

Canadian National

Railway case(1999)

Canadian National Railway and Others v. Lovat

Tunnel Equipment Inc (1999)174 DLR (4th) 385

7

WSG Nimbus case

(2002)

WSG Nimbus Pte Ltd v. Board of Control for Cricket

in Sri Lanka [2002] 3 SLR 603

7

NB Three Shipping

case (2004)

NB Three Shipping Ltd v. Harebell Shipping Ltd.

[2004] EWHC (Comm) 2001

7

South India Shipping

case (1981)

Bremer Vulkan Schiffbau und Maschinenefabrik v.

South India Shipping Corp. Ltd. [1981] AC 909

8`

Corral case (2012) Corral v. Outer Marker LLC

2012 WL 243318 E.D.N.Y., January 24, 2012

9

Convergent Wealth

Advisors case (2012)

Convergent Wealth Advisors LLC v. Lydian Holding

Co. 2012 WL 2148221 S.D.N.Y.,2012, June 13, 2012

9

Homeward

Residential case

(2014)

Homeward Residential, Inc. v. Sand Canyon Corp.

2014 WL 2510809 S.D.N.Y.,2014. May 28, 2014

9

Carolina Power &

Light Co. case (1983)

John Hancock Mut. Life Ins. Co. v. Carolina Power &

Light Co. 717 F.2d 664, 669 n.8 (2d Cir. 1983)

10

Ajax Tool Works

case(2003)

Ajax Tool Works, Inc. v. Can.-Eng Manufacturing

Ltd. Available at: http://cisgw3.law.pace.edu/

case/30129ul.html

15

Easom Automatom

Systems case(2007)

Easom Automation Systems, Inc. v. Thyssenkrupp

Fabco Corp. 2007 U.S. Dist. LEXIS 72461 (E.D.

Mich. 2007). Available at:

http://www.cisg.law.pace.edu/cisg/biblio/zoccolillo1.h

tml

16

Atlarex case(2000) Rheinland Versicherungen v. Atlarex

Italy 12 July 2000 District Court Vigevano

Available at:

http://cisg3.law.pace.edu/cases/000712i3.html.

18

Assante Technologies

case (2001)

Assante Technologies, Inc. v. PMC-Sierra, Inc.

2001, 164 F.Supp. 2d 1142.

21

Società X v. Società

Y (1994).

Società X v. Società Y,

Arbitration 19 April 1994 Ad Hoc Arbitral Tribunal -

Florence

23

Lalaosa case (1995) Société Ytong v Lalaosa, Grenoble

16 June 1993, unreported but translated in English in

(1995) 14 J L & Comm 109 and abstracted as CLOUT

Case 25.

25

Adamfi Video (1992) Adamfi Video v. Alkotok Studiosa Kisszovetkezet

Hungary 24 March, 1992 Metropolitan Court

Available at:

http://cisgw3.law.pace.edu/cases/920324h1.html

27

BP Oil case (2003) BP Oil International Ltd. v. Empresa Estatal

Petroleos de Ecuador 332 F.3d 333,337(S.D.Texas

2003) Available at:

http://cisgw3.law.pace.edu/cases/030611u1.html

27

Bulletproof vest case Multi-Member Court of First Instance of Athens

4505/2009

Available at:

http://cisgw3.law.pace.edu/cases/094505gr.html

34

Fiberglass Materials

Case

Tribunal cantonal [Higher Cantonal Court] du Valais

C1 08 45

Available at:

http://cisgw3.law.pace.edu/cases/090128s1.html

35

Oberlandesgericht

Koblenz

Oberlandesgericht Koblenz, Germany

Case No: 2 U 580/96. Decided on: 11.09.1998

Available at:

http://www.unilex.info/case.cfm?id=300

49

G v. S case Tribunal Cantonal de Sion, Switzerland

Available at:

50

http://cisgw3.law.pace.edu/cases/980629s1.html

ARTICLES

Cited as Content Citing

Footnotes

Graves(2011) Jack M Graves ‘CISG Article 6 and Issues of Formation:

The Problem of Circularity’ Annals of the Faculty of Law

in Belgrade, Belgrade Law Review, University of

Belgrade, Year LIX, 2011, No. 3.

14

Drago &

Zoccolillo, Esq.

(2002)

Thomas J. Drago,Esq. and Alan F. Zoccolillo, ‘Be Explicit:

Drafting Choice of Law Clauses in International Sale of

Goods Contracts, Esq.’ Available at:

http://www.cisg.law.pace.edu/cisg/biblio/zoccolillo1.html

17

Holdsworth,

deKieffer &

Horgan (2001)

Judith L. Holdsworth, ‘Practical Applications of the

United Nations Convention on Contracts for the

International Sale of Goods (“CISG”), 2001’, DEKIEFFER

& HORGAN Available at:

http://www.cisg.law.pace.edu/cisg/biblio/holdsworth.html

19

CISG-AC

Opinion No. 16

(2014).

‘CISG-AC Opinion No. 16, Exclusion of the CISG under

Article 6’, Rapporteur: Doctor Lisa Spagnolo, Monash

University, Australia. Adopted by the CISG Advisory

Council following its 19th meeting, in Pretoria, South

20

Africa on 30 May 2014. Available at:

http://www.cisg.law.pace.edu/cisg/CISG-AC-op16.html

CISG

Explanatory Note

United Nations Convention on Contracts for the

International Sale of Goods (Vienna,1980) (CISG),

Explanatory Note. Available at:

http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goo

ds/1980CISG.html

22, 28

Manz, Bappenr,

Witz and Selbhen

(1991)

Gerhard Manz, Susan Padmann-Reich Bappenr, Witz and

Selbhen ,‘Introduction of the UN Convention on

International Sale of Goods in Germany’ (Freiburg,

Germany/Brussels, Belgium) 19 Int'l Bus. Law. 300 1991

26

Callaghan(1994) James J. Callaghan ‘U.N. Convention On Contracts For

The International Sale Of Goods: Examining The Gap-

Filling Role Of CISG In Two French Decisions’

14 J.L. & Com. 183 1994-1995

27

Zeller (2006) Dr. Bruno Zeller ‘The Unidroit Principles Of Contract

Law; Is There Room For Their Inclusion Into Domestic

Contracts?’ 26 J.L. & Com. 115 2006-2007

29

Volken (1986) Paul Volken ‘The Vienna Convention:

Scope,Interpretation, and Gap-Filling,In International Sale

of Goods: Dubrovnik Lectures’ p. 19, 21 (Peter Sarcevc &

Paul Volken eds., 1986)

30

TABLE OF CONTENTS

ARGUMENTS ADVANCED ................................................................................................... 1

I. The tribunal has the jurisdiction to adjudicate on the claims presented before it. ............... 1

i. The Tribunal has the power to decide on its own jurisdiction. ............................. 1

ii. The dispute resolution clause reflects the intention of the parties to arbitrate. ..... 2

iii. The dispute resolution clause constitutes a valid and binding arbitration

agreement. ..................................................................................................................... 3

iv. The tribunal has the power to adjudicate with regard to all claims. .................. 4

v. The tribunal does not have the power to address the counterclaims of the

Respondent. ................................................................................................................... 4

II. The CISG governs the claims arising under SPA No.1 and SPA No.2. .............................. 5

i. The choice of law clause must expressly exclude application of the CISG .......... 6

ii. CISG is a part of the domestic law of the state. .................................................... 7

III. The Claimant is entitled to payment under SPA No.2. ........................................................ 8

i. The Claimant was not responsible for insuring the goods. ................................... 8

ii. The Claimant complied with the deadline for delivery of the prototype .............. 8

iii. The watchstraps were in conformity with SPA No.2. ....................................... 9

iv. The Claimant is entitled to payment for goods delivered. ............................... 12

REQUEST FOR RELIEF ........................................................................................................ 13

1

ARGUMENTS ADVANCED

I. THE TRIBUNAL HAS THE JURISDICTION TO ADJUDICATE ON THE CLAIMS PRESENTED

BEFORE IT.

The claims presented before this tribunal have been objected to by the Respondent on the

grounds of jurisdiction, in the first instance. Therefore, it becomes essential to prove that (i) The

tribunal has the power to decide on its own jurisdiction, (ii) The dispute resolution clause reflects

the intention of the parties to refer the matter to arbitration, (iii) The dispute resolution clause

constitutes a valid and binding arbitration agreement, (iv) The tribunal has the power to

adjudicate in the matter of all claims raised before it, (v) The tribunal cannot hear the matter of

the Respondent’s counterclaim.

i. The Tribunal has the power to decide on its own jurisdiction.

The question relates to whether the tribunal has the jurisdiction to hear the claims raised by the

Claimant. The applicable principle here is that of competence-competence which states that an

arbitral tribunal has the power to decide its own competence to hear a matter, as does this

tribunal.1 It is generally accepted in international commercial arbitration practice. It overcomes

an issue that could arise in the future where the tribunal finds the arbitration agreement to be

invalid prima facie and does not have the authority to make that finding in the first place.

1 Chap.5.4(c), REDFERN & HUNTER (1999); Arts.6(1), 6(3), CIETAC Rules; Art.41(1), ICSID

Convention; Art.21, UNCITRAL Rules; Article 6(2), ICC Rules.

2

The principle has been incorporated into the domestic laws of many countries,2international

adjudicating institutions,3 as well as case law.4 These clearly show that an arbitration tribunal has

the competence to decide the matter of its jurisdiction.

ii. The dispute resolution clause reflects the intention of the parties to arbitrate.

The validity of the arbitration agreement can be ascertained from the intention reflected in the

clause as arbitration is a consensual process. Language providing that a party “may” submit a

dispute to arbitration entails mandatory arbitration, otherwise it would render the clause

meaningless since parties could always voluntarily submit to arbitration. Therefore, the clause

does not provide a choice between arbitration and litigation, but between arbitration and doing

nothing at all which also implies that the agreement becomes binding once the option is

exercised. Provisions should not be interpreted in a way that renders them superfluous.5

Thus, arbitration is mandatory once demanded by either party even though the clause uses the

word “may” instead of “shall”.6 Since the option can be exercised by either party, the

Respondent has shown strong intention to submit disputes to arbitration and it is distinct from the

2 S.30, English Arbitration Act, 1996; S.2, Swedish Arbitration Act, 1999.

3Art.36(6), ICJ Statute; see supra note 1.

4 ARAMCO case at 117; Joc Oil Case; Texaco case.

5 JA Apparel case (2010); Reyes case (2012); MBIA case (2012); Dan Dong Dong Jin case

(2012).

6 Hirshenson case(2001); Mercury Constructioncase (1983); Maguire v. King (2005); Owens-

Brockway case (1996); Ziegler case (1982); Conax Florida case(2007).

3

mere mention of arbitration as an idea. Thus, the arbitration agreement reflects a valid consensus

to arbitrate.

In any case, exercise of the option of arbitration by the Claimant is sufficient to constitute a

binding arbitration agreement.

When a dispute resolution clause creates an option to arbitrate, exercisable by either party, once

the option is exercised, a binding arbitration agreement comes into existence.7 This is pursuant to

the intention shown by the parties to do the same with regard to disputes arising out of their

present contractual relationship. An analysis whereby notice will trigger the mutual agreement to

arbitrate fits better into the consensual scheme of arbitration than one which requires artificial

construction.8

iii. The dispute resolution clause constitutes a valid and binding arbitration agreement.

The clause provides the seat, venue, language and binding nature of arbitral award and this is

enough to constitute certainty. It is unreasonable to assume that despite all the effort made to

flesh out the arbitration clause, there is still ambiguity. Art.20(c) of the dispute resolution clause

allows for it to be interpreted as per the position of law in the State of New York according to

which, a contract cannot be deemed to be ambiguous or in dispute simply because parties do not

agree on its construction.9 The only ambiguity could be with regard to whether the parties are

7Bharat Engineering Corp case (1977); Canadian National Railway case(1999); WSG Nimbus

case (2002); NB Three Shipping case (2004).

8 South India Shipping case (1981).

9 Reyes case (2012); Corral case (2012); Convergent Wealth Advisors case (2012); Homeward

Residential case (2014).

4

excluded from referring payment disputes to litigation. This does not affect the operation of the

clause in constituting a valid agreement because it is certain that the clause becomes binding

once the option is exercised. Since there is no dispute regarding the certainty of the clause itself,

it constitutes a valid arbitration agreement.

In any case, the specific prevails over the general10

The specificity of Art.19(a) overrides the generality of 19(b) and even if the parties are entitled

to refer any dispute to litigation, 19(a) ensures that the parties can still refer payment disputes to

arbitration.

iv. The tribunal has the power to adjudicate with regard to all claims.

An arbitration agreement confers a mandate upon an arbitral tribunal to decide any and all

disputes that are within the ambit of that agreement. The claims presented before the tribunal are

with regard to money due to the Claimant as a result of the Respondent withholding payment for

goods delivered. This is clearly a “payment dispute” under the SPA No.2 and is arbitrable.

v. The tribunal does not have the power to address the counterclaims of the Respondent.

If institutional rules only state that a counter claim is allowed, as the CIETAC Rules do,

reference may be made to other institutional rules to determine the extent of a counter claim.

These provide that jurisdiction whenever it is based ‘on the same agreement to arbitrate’, or on

10 MBIA case (2012); Carolina Power & Light Co. case (1983).

5

the ‘same relationship’.11 The relief sought by the Respondent does not pertain to the present

contractual relationship between them and is thus outside the jurisdiction of the tribunal.

A counterclaim may be raised only if it falls within reach of the arbitration clause. This follows

from the basic principle that arbitral jurisdiction is based on the will of the parties, and that

arbitral tribunal may decide only on the issues which fall under the scope of the arbitration

clause.12 Here, intention is paramount and it is evident from the exchange of emails between the

parties that they terminated the contractual relationship set out in SPA No.1. Thus, the

Respondent’s counterclaim, which is based on the earlier transaction, does not fall under the

ambit of the arbitration agreement that confers power on the tribunal in the present matter.

II. THE CISG GOVERNS THE CLAIMS ARISING UNDER SPA NO.1 AND SPA NO.2.

The CISG governs both the agreements as Yanyu and Wulaba are parties to it, (i) The choice of

law clause must expressly exclude the application of the CISG and (ii) As CISG forms a part of

the domestic law of the Contracting States, it continues to be applicable notwithstanding the

clause.

11Art.23, FTCA Serbia, Art.15,PCA Croatia; Art.3(2), AAA Rules; Art.7(a),VAC Rules;

Art.19(1),Japan CAA Rules. Similarly, with regard to ICC arbitration, Derains &Schwartz,

(1998) at 72.

12REDFERN & HUNTER (2004), p.295; BORN (2001), p. 298; FOUCHARD (1999), p.1222.

6

i. The choice of law clause must expressly exclude application of the CISG

CISG allows the parties to completely or partially exclude the provisions of the Convention13

i.e., they may “opt out” of CISG.14 However, a standard choice of law clause that does not

mention CISG is insufficient15 to opt out of CISG merely because it specifies the law of a

particular jurisdiction to govern the contract.16 The choice of law provision must expressly

exclude application of the CISG17 i.e., being aware that CISG applies to the contract, the Parties

should intend to exclude it.18 This is because an express choice of law of a specific domestic law

of a Contracting State does not mean an implied exclusion.19

The clear intent to exclude can be inferred from an express exclusion of the CISG or the choice

of the law of a non-contracting State or the choice of an expressly specified domestic statute or

Code where that would otherwise be displaced by the CISG’s application.20 Mere specification

of the general law of a Contracting State does not exclude the application of the Convention.21As

13 Art.6, CISG.

14 Graves (2011).

15Ajax Tool Works case (2003).

16Easom Automation Systems case (2007).

17Drago & Zoccolillo, Esq. (2002).

18Atlarex case (2000).

19Holdsworth, deKieffer & Horgan (2001).

20CISG-AC Opinion No. 16 (2014).

21Assante Technologies case (2001).

7

certainty is essential in commercial exchanges22, in the absence of clear language indicating that

the parties intend to opt out of the CISG, it will continue to be applicable.23

The clause specifying the choice of governing law in this case states that the contract shall be

governed by the national law of Wulaba.24 No express exclusion of the CISG can be found in the

clause, thus making the CISG applicable to both the SPAs.

ii. CISG is a part of the domestic law of the state.

The CISG is a “self-executing treaty”25 implying that no additional legislation is required to be

enacted to enforce its provisions.26 On a signatory’s assent to the CISG, it automatically becomes

part of the domestic law of that State27 and its application prevails over other regulations that fall

within its scope.28 This is because it forms part of the municipal law of the State.29 All persons

residing in such a State can assert their rights or demand the fulfilment of another party’s duty by

referring directly to the treaty itself.30

22 CISG Explanatory Note.

23Società X v. Società Y (1994).

24 Art.20, SPA No.2.

25Lalaosa case (1995).

26 Manz, Bappenr, Witz and Selbhen(1991).

27Adamfi Video (1992), BP Oil case (2003), Callaghan(1994)

28 Supra note 22.

29Zeller (2006).

30Volken(1986).

8

Therefore, the exclusion in Art.20 of SPA No.2 is nullified with regard to the CISG.31 Hence, the

CISG governs both the agreements.

III. THE CLAIMANT IS ENTITLED TO PAYMENT UNDER SPA NO.2.

Assuming the counterclaims are admitted by the tribunal and the CISG applies, it is submitted

that (i)the responsibility for insurance was not on the Claimant, (ii)the deadline for delivery of

the prototypes was complied with, (iii)the watchstraps were in conformity with the contract, and

therefore, (iv)the claimant is entitled to payment for the goods delivered.

i. The Claimant was not responsible for insuring the goods.

In consideration of the concerns of the Respondent, Incoterms 2010 (DDP) was incorporated.

Consequently, it was responsible for all costs of customs formalities as well as all duties, taxes

and other charges and for cost of transit through any country prior to delivery.32 However, the

Claimant had no obligation to insure the goods as DDP does not include insurance.33

ii. The Claimant complied with the deadline for delivery of the prototype

The prototypes were delivered within the time stipulated by the contract. The initial deposit was

received on 31st July, 2014. This is the day of the triggering event. There is a general assumption

31Supra note 12.

32S.A6, DDP, Incoterms 2010.

33Id at S.A3.

9

that this is excluded in the calculation.34 The number of days is calculated after exclusion of the

day of performance of obligation by the other party.35 Since the payment was deposited on

31stJuly, 2014 the contractual deadline of fourteen days would therefore start from 1st August,

2014. The prototypes were delivered on 14th August, 2014 which was the fourteenth day and was

within the deadline. In a period of time fixed for delivery, the seller can, in principle, choose

when he wishes to deliver: on the first day, on the last day, or sometime in between.36

iii. The watchstraps were in conformity with SPA No.2.

The Respondent is withholding payment alleging that the goods were not in conformity with the

agreed terms of quality. However, (a)conformity with the prototype implies fulfilment of the

terms of the contract,(b)The Claimant has not committed any fundamental breach of the contract

by using tools to mass produce the final goods

a. Conformity with the prototype implies fulfilment of the contract.

The transaction between the Parties was a sale by sample. Therefore, the goods will be held to

not conform to the contract only if they do not possess qualities of the goods which the seller

held out as a sample or model.37 On 14th August 2014, the prototypes were manufactured and

sent for approval to the Respondent. First, the Respondent failed to raise an objection as to the

size of the watchstrap while approving the prototypes.38 Since the final goods were produced in

34Bulletproof Vest case.

35Fiber glass materials case.

36 Schwenzer(2010), p.552-553.

37Article 35(2)(c) CISG.

38 Claimant’s Ex. No.4.

10

conformity with the approved prototype, the Respondent is not entitled to refuse them on these

grounds. Further, the objection with regard to the quality of leather and method of production is

not justified. The contract required that the watchstraps be made of soft genuine Yanyu leather39

and the same was followed in producing the final goods. Leather is not consistent in terms of

grain or colour therefore it is inevitable that goods made of even the same roll of leather are

prone to differences.40 The existence of any discrepancy as permitted in various trade sectors,

that are usual in the particular trade concerned, is not to be regarded as constituting a lack of

conformity.41

b. The Claimant has not committed any fundamental breach of the contract by using tools to

mass produce the final goods

There is a distinction between the sampling stage and mass production. The prototypes were

handmade because it has been the Claimant’s policy to invest in necessary tooling for mass

production only after approval of the buyer in case of customized orders. This policy is not

inconsistent with business custom.42 The Respondent was aware of the history and reputation of

the Claimant.43 Even a preliminary research by a prospective buyer would reveal the common

customs of business and so the Claimant reasonably presumed that the Respondent ought to have

known the common policy adopted by the Claimant in manufacturing the goods.

39 Claimant’s Ex. No.6, Article 2(1)(a), SPA No.2.

40 Clarification No.26.

41 Supra Note 36 at p.573.

42 Clarification No.71.

43 Claimant’s Ex. No.1.

11

Further, the Respondent pressed for an expedient production of 5,000,000 watchstraps within 60

days. Given that it takes 14 days to hand stitch eight pieces, it would be impossible to

manufacture the entire consignment in 60 days without using conventional methods of mass

production. There was no request made by the Respondent that the watchstrap should look

handmade. Where doubt exists concerning a party’s intention, or the other party’s awareness of

that intention, statements should be interpreted according to the understanding of a reasonable

person in the circumstances.44 It wouldn’t be unreasonable to expect the Respondent, as a

prospective buyer, to understand the practical problems of mass production and the common

business practices involved.

In any case, the Respondent is estopped from alleging non-conformity.

The buyer should notify the seller of the alleged non-conformity within a “reasonable time” after

it “knew or ought to have known” of the non-conformity.45 In case the buyer wishes to reject the

goods, a rapid notice should be given to the seller to provide him an opportunity to remedy the

defect.46 A buyer who fails to notify the seller loses his right to all remedies relating to non-

conformity.47

The Respondent failed to notify the Claimant of the alleged non-conformity within a reasonable

time and thus forfeited its right to rely on non-conformity of the watchstraps in accordance with

Articles 38 and 39 of the CISG. The Respondent received the goods on 29th January, 2015 and

44Article 8(2) CISG; Honnold(2009) Pg. 118.

45Art.39(1), CISG.

46 Supra Note 36 at p.631.

47 Supra Note 44 at p.259.

12

the Respondent’s employees had checked some pieces in every carton when the consignment

arrived at the warehouse.48 The examination of the goods by the buyer must be made “within as

short a period as is practicable in the circumstances”. Examination of the goods should occur

within a week after delivery and notice of non-conformity should be given in another week at the

most.49A period of fourteen days for examination and notice is to be considered reasonable in the

absence of any specific circumstances.50 The Claimant was notified of the alleged non-

conformity only on 27th February, 2015.Examination of the watch straps ought not to have taken

as long as it did and by notifying the Claimant only after 30 days of the receipt of the

watchstraps the Respondent failed to provide notice in accordance with Article 39(1) of CISG.

iv. The Claimant is entitled to payment for goods delivered.

In the event a buyer defaults on certain obligations under the contract or the CISG convention,

the seller may exercise his rights provided in Articles 62-65 of CISG. Requiring specific

performance from the defaulting party flows from the principle of pacta sunt servanda and is an

accepted principle of contractual and international law.51 Payment of price is the most important

contractual obligation in practice.52 From the above submissions, it is evident that the Claimant is

not in breach of any of the terms and conditions of the contract. It is entitled to receive payments

for goods delivered the Respondent.

48Clarification No. 19.

49Oberlandesgericht Koblenz.

50G v. S case.

51 Supra Note 36 at p.876.

52 Id at p.869.

13

REQUEST FOR RELIEF

In light of the arguments advanced, the Claimant respectfully requests the Tribunal to find that:

1. The Tribunal has the jurisdiction to adjudicate on the claims presented before it.

2. The CISG governs the claims arising under SPA No.1 and SPA No.2.

3. The Claimant is entitled to payment under SPA No.2 amounting to USD 9,600,000 plus

interest and costs i.e. RMB 61,152,000.